Gillibrand Has Plan To Crack Down On Financial Fraud Vs. Seniors

BY JOHN TOSCANO

U.S. Senator Kirsten Gillibrand unveiled a plan last week to attack financial fraud against seniors, increase penalties for those scamming seniors, and increase awareness of criminal tactics against seniors.

Gillibrand was prompted to take action after a new report from her office staff estimates that over half a million New York seniors fall victim to consumer fraud every year, losing approximately $180 million.

Gillibrand also cited Federal Trade Commission estimates that one in five seniors are fraud victims.

In New York City, she pointed out, an estimated 200,000 seniors have been hit by fraud at a cost of over $70 million. Every area of the state is victimized, she said.

Gillibrand stated: "Seniors have spent a lifetime saving and preparing for the golden years, and they deserve financial security and peace of mind. But far too many seniors are being lured into bad investments, and getting scammed by criminals out of their savings and benefits. Seniors should have confidence that their savings and investments are in the hands of real experts, not criminals. My plan will give states the resources they need to protect seniors, increase penalties to crack down on fraud, and empower seniors to protect themselves."

The senator said federal law protects those benefits, but many seniors who receive them by having them deposited directly into their bank accounts are not protected by those laws because of a loophole exploited by creditors. Under Gillibrand's new plan to protect seniors, perpetrators would pay an additional $50,000 civil fine for each violation that is committed against a senior.

Research shows, the lawmaker said, that seniors face serious risks from fraudulent salesmen. A MetLife study found, she said, that seniors lose an estimated $2.6 billion from financial abuse every year and they account for more than half of all investor complaints received by state securities regulators.

Under her Senior Investor Protections Enhancement Act, criminals who commit securities violations against seniors would be targeted for selling products unsuitable for their age, failing to disclose fees, charging large penalty fees, or switching the investment product actually sold from the one that was marketed.

Gillibrand's legislation would also crack down on senior advisor scams that lure seniors into fraudulent investment opportunities. Under her Senior Investment Protection Act, grants would be given to states to encourage them to existing regulations that protect seniors from these types of scams. The grants would pay to hire staff or acquire technology to prosecute fraud and train regulators and law enforcement officials to prevent these scams.

Gillibrand's plan also addresses the recent increase in debt collection scams aimed at Social Security benefits and veterans' benefits.

The senator said federal law protects those benefits, but many seniors who receive them by having them deposited directly into their bank accounts are not protected by those laws because of a loophole exploited by creditors.

The loophole, she explained, allows debt collectors to get court orders to freeze and garnish the bank accounts of seniors who owe debts. From 2006 to 2007, she said, nearly $180 million was collected in this manner, according to S.S. officials.

While New York state has passed laws to protect S.S. recipients from this scam, the absence of federal laws leaves them still at risk. So Gillibrand has co-sponsored the Illegal Garnishment Protection Act, which would end promoting direct deposit for Social Security and veterans' checks until the Treasury Department institutes new regulations to protect consumers.